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LR 8.6 Criteria for approval as a sponsor

List of sponsors

LR 8.6.1G

The FCA will maintain a list of sponsors on its website.

Application for approval as a sponsor

LR 8.6.2R

A person wanting to provide sponsor services4, and to be included on the list of sponsors, must apply to the FCA for approval as a sponsor by submitting the following to the Sponsor Supervision Team at the FCA's address:

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  1. (1)

    a completed Sponsor Firm Application Form; and4

  2. (2)

    [deleted]4

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  3. (3)

    the application fee set out in 1FEES 31.

[Note: The Sponsor's Firm Application Form can be found on the UKLA section of the FCA's website.]

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LR 8.6.3R

A person wanting to provide sponsor services 4and be included on the list of sponsors must also submit:

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  1. (1)

    all additional documents, explanations and information as required by the FCA; and

  2. (2)

    verification of any information in such a manner as the FCA may specify.

LR 8.6.4G

When considering an application for approval as a sponsor the FCA may:

  1. (1)

    carry out any enquiries and request any further information which it considers appropriate, including consulting other regulators;

  2. (2)

    request that the applicant or its specified representative answer questions and explain any matter the FCA considers relevant to the application; and6

  3. (3)

    take into account any information which it considers appropriate in relation to the application.2

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  4. (4)

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[Note: The decision-making procedures that the FCA will follow when it4considers whether to refuse an application for approval as a sponsor are set out in DEPP3.]

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Criteria for approval as a sponsor

LR 8.6.5R

The FCA will approve a person as a sponsor only if it is satisfied that the person :

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  1. (1)

    is 4an authorised person or a member of a designated professional body;

  2. (2)

    is 4competent to provide8sponsor services4 in accordance with LR 88; and

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  3. (3)

    has appropriate 4systems and controls in place to carry out its role as a sponsor in accordance with LR 884.

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LR 8.6.5AR

7The FCA may impose restrictions or limitations on the services a sponsor can provide at the time of granting a sponsor's approval.

LR 8.6.5BG

7Situations when the FCA may impose restrictions or limitations on the services a sponsor can provide include (but are not limited to) where it appears to the FCA that:

  1. (1)

    the employees of the person applying to be a sponsor whom it is proposed will perform sponsor services have no or limited relevant experience and expertise of providing certain types of sponsor services or of providing sponsor services to certain types of company; or

  2. (2)

    the person applying to be a sponsor does not have systems and controls in place which are appropriate for the nature of the sponsor services which the person applying to be a sponsor proposes to undertake.

[Note: A statutory notice may be required under section 88 of the Act. Where this is the case, the procedure for giving a statutory notice is set out in DEPP.]

LR 8.6.5CG

8Where a person wishes to apply for approval as a sponsor to provide a limited range of sponsor services, it may do so on the basis that the FCA will impose a limitation or restriction on its approval (in accordance with section 88 of the Act). In such circumstances, the FCA will assess whether the person satisfies LR 8.6.5R (2) and LR 8.6.5R (3) taking into consideration the sponsor services to which the approval, as formally limited or restricted by the FCA, will relate.

8Continuing obligations

LR 8.6.6R

A sponsor must comply, at all times, with the criteria set out in LR 8.6.5 R.

Competence of a sponsor

LR 8.6.7R

A sponsor, or a 8person 48applying for approval as a sponsor, will not satisfy LR 8.6.5R (2) unless it has:

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  1. (1)

    8submitted a sponsor declaration to the FCA:

    1. (a)

      for a person applying for approval as a sponsor, within three years of the date of its application; and

    2. (b)

      for a sponsor, within the previous three years; and

  2. (2)

    8a sufficient number of employees with the skills, knowledge and expertise necessary for it to:

    1. (a)

      provide sponsor services in accordance with LR 8.3;

    2. (b)

      understand:

      1. (i)

        the rules, guidance and ESMA publications directly relevant to sponsor services;

      2. (ii)

        the procedural requirements and processes of the FCA;

      3. (iii)

        the due diligence process required in order to provide sponsor services in accordance with LR 8.3 and LR 8.4;

      4. (iv)

        the responsibilities and obligations of a sponsor in LR 8; and

      5. (v)

        specialist industry sectors, if relevant to the sponsor services it provides or intends to provide; and

    3. (c)

      be able to comply with the key contact requirements in LR 8.6.19 R.

LR 8.6.7AG

8To determine whether a sponsor or a person applying for approval as a sponsor is able to satisfy LR 8.6.7R (1)(a), the FCA may consider whether any of the person's employees have had material involvement in the provision of sponsor services that have required the submission of a sponsor declaration within the previous three years.

LR 8.6.7BG

8In exceptional circumstances, the FCA may consider dispensing with, or modifying, the requirement in LR 8.6.7R (1) in accordance with LR 1.2.1 R.

LR 8.6.7CG

8In assessing whether a sponsor or a person applying for approval as a sponsor satisfies LR 8.6.7R (2), the FCA will consider a variety of factors including:

  1. (1)

    the nature, scale and complexity of its business;

  2. (2)

    the diversity of its operations;

  3. (3)

    the volume and size of transactions it undertakes;

  4. (4)

    the volume and size of transactions it anticipates undertaking in the following year; and

  5. (5)

    the degree of risk associated with the transactions it undertakes or anticipates undertaking in the following year.

LR 8.6.7DG

8Notwithstanding LR 8.6.7C G, when considering whether a sponsor satisfies LR 8.6.7R (2)(c) the FCA expects a sponsor to have no less than two employees who are able to satisfy the key contact requirements in LR 8.6.19R (2).

LR 8.6.8G
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  1. (1)

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  2. (2)

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  3. (3)

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LR 8.6.9G
  1. (1)

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  2. (2)

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    1. (a)

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    2. (b)

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  3. (3)

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LR 8.6.9AG

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LR 8.6.9BG

4In assessing whether a sponsor or a8 person applying for approval as a sponsor can demonstrate it is competent in the areas required under LR 8.6.7R (2), the FCA may also take into account, where relevant, the guidance or advice on the listing rules or disclosure requirements9 and transparency rules 5the sponsor or8 person has given in circumstances other than in providing sponsor services.

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LR 8.6.10R

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LR 8.6.11G

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Systems and controls: general

LR 8.6.12R

8A sponsor or a person applying for approval as a sponsor will not satisfy LR 8.6.5R (3) unless it has in place:

  1. (1)

    clear and effective reporting lines for the provision of sponsor services (including clear and effective management responsibilities);

  2. (1A)

    effective systems and controls which require employees with management responsibilities for the provision of sponsor services to understand and apply the requirements of LR 8;

  3. (2)

    effective systems and controls for the appropriate supervision of employees engaged in the provision of sponsor services by the sponsor;

  4. (3)

    effective systems and controls for compliance with all applicable listing rules at all times, including when performing sponsor services;

  5. (4)

    [deleted]

  6. (5)

    [deleted]

  7. (6)

    effective systems and controls which require appropriate staffing arrangements for providing each sponsor service in line with the principles for sponsors in LR 8.3;

  8. (7)

    effective systems and controls for employees engaged in the provision of sponsor services to receive appropriate guidance and training to provide each sponsor service in line with the principles for sponsors in LR 8.3;

  9. (8)

    effective systems and controls to identify and manage conflicts of interest;

  10. (9)

    effective systems and controls for compliance with each of the requirements in LR 8.6.7R (2)(b); and

  11. (10)

    systems and controls which comply with the requirements of LR 8.6.16A R (Record management).

LR 8.6.13G

When considering a sponsor's ability to comply with LR 8.6.12 R, the FCA will consider8 a variety of factors, including:

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  1. (1)

    the nature, scale and complexity of its business;

  2. (2)

    the diversity of its operations;

  3. (3)

    the volume and size of the transactions it undertakes;

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  4. (4)

    the volume and size of the transactions it anticipates undertaking in the following year; and4

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  5. (5)

    the degree of risk associated with the transactions it undertakes or anticipates undertaking in the following year8.4

Systems and controls: conflicts of interest4

LR 8.6.13AG

4A sponsor will generally be regarded as having appropriate systems and controls for identifying and managing conflicts6 if it has in place effective policies and procedures:

  1. (1)

    to ensure that decisions taken on managing conflicts of interest are taken by appropriately senior staff and on a timely basis;

  2. (2)

    to monitor whether arrangements put in place to manage conflicts are effective; and6

  3. (3)

    to ensure that individuals within the sponsor are appropriately trained to enable them to identify, escalate and manage conflicts of interest.6

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  4. (4)

    [deleted]6

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LR 8.6.13BG

4The policies and procedures referred to in LR 8.6.13A G are distinct from the actual organisational and administrative arrangements that a sponsor is required to put in place and maintain under LR 8.3.9 R to manage specific conflicts.

LR 8.6.14G

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LR 8.6.15R

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LR 8.6.16G

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  1. (1)

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  2. (2)

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  3. (3)

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    1. (a)

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    2. (b)

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    3. (c)

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  4. (4)

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Systems and controls: record management

LR 8.6.16AR

6A sponsor must have effective arrangements to create and retain for six years accessible records which are sufficient to be capable of demonstrating that it has provided sponsor services and otherwise complied with its obligations under LR 8 including:

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  1. (1)

    where a declaration is to be submitted to the FCA:8

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    1. (a)

      under LR 8.4.3R (1), LR 8.4.9R (1), LR 8.4.13R (1), LR 8.4.14R (2) or LR 8.4.17 R; or

    2. (b)

      pursuant to an appointment under LR 8.2.1R (5);

    the basis of each declaration given;8

  2. (2)

    where any opinion, assurance or confirmation is provided by a sponsor to the FCA or a company with or applying for a premium listing in relation to a sponsor service, the basis of that opinion, assurance or confirmation;

  3. (3)

    where a sponsor provides guidance to a company with or applying for a premium listing pursuant to LR 8.2.2 R, LR 8.2.3 R or LR 8.3.1R (2), the basis upon which the guidance is given and upon which any judgments or opinions underlying the guidance have been made or given; and

  4. (4)

    the steps taken to comply with its obligations under LR 8.3.7B R, LR 8.3.9 R ,8 LR 8.3.11 R and LR 8.6.6 R.

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LR 8.6.16BG

6Records should:

  1. (1)

    be capable of timely retrieval; and

  2. (2)

    include material communications which relate to the provision of sponsor services, including any advice or guidance given to a company with or applying for a premium listing in relation to their responsibilities under the listing rules, the disclosure requirements9 and the transparency rules.

LR 8.6.16CG

6In considering whether a sponsor has satisfied the requirements regarding sufficiency of records in LR 8.6.16A R, the FCA will consider whether the records would enable a person with general knowledge of the sponsor regime but no specific knowledge of the actual sponsor service undertaken to understand and verify the basis upon which material judgments have been made throughout the provision of the sponsor service.

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LR 8.6.17R

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LR 8.6.18R

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8Key contact8

LR 8.6.19R

4For each 8sponsor service requiring the submission of a document to the FCA or contact with the FCA, a sponsor must:

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  1. (1)

    at the time of submission or on first making contact with the FCA8notify the FCAof the name and contact details of a key 8contact within8 the sponsor for that matter8; and

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  2. (2)

    ensure that its key8contact :

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    1. (a)

      has8 sufficient knowledge about the listed company or applicant and the proposed matter8to be able to answer queries from the FCA about it;

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    2. (b)

      is8 available to answer queries from the FCA on any business day between 76am and 6pm;

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    3. (c)

      is authorised to make representations to the FCA for and on behalf of the sponsor;8

    4. (d)

      possesses technical knowledge of rules, guidance and ESMA publications directly relevant to the sponsor service; and8

    5. (e)

      understands the responsibilities and obligations of the sponsor under LR 8 in relation to the sponsor service.8

LR 8.6.20G

8The FCA expects an employee carrying out the role of key contact to have provided a sponsor service in the previous three years.